Commentary

C2.121 Interaction with inheritance tax

Capital gains tax
Capital gains tax | Commentary

C2.121 Interaction with inheritance tax

Capital gains tax | Commentary

C2.121 Interaction with inheritance tax

A disposal for capital gains tax may also be a transfer of value for inheritance tax; a gift inter vivos is a common example. However, the value of the transfer for inheritance tax purposes is not taken as the value for capital gains tax, the latter being determined according to the market value principle (see C2.120).

Example

X owned 60% of the issued share capital of FGH Ltd. He gifted half of his shareholding to his son Y. X died two years later.

For inheritance tax, the value transferred by the gift is the diminution in value of

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